Maruti Suzuki to hit 1.7 million units in production this fiscal

The additional capacity will not only reduce the waiting lists for the Ignis, Baleno and Vitara Brezza, but will also cater to the launches and upgrades lined up for the year.Nandini Sen Gupta | TNN | April 18, 2017, 07:33 IST

CHENNAI: Working on its 2020 production target of 2 million units, car market leader Maruti Suzuki will take on the passenger vehicle market in the new financial year with a combined production capacity of around 1.7 million units.

The additional capacity will not only reduce the waiting lists for the Ignis, Baleno and Vitara Brezza, but will also cater to the launches and upgrades lined up for the year.

Speaking to TOI on email, Kenichi Ayukawa, MD & CEO, Maruti Suzuki said: “The Suzuki Motor Gujarat (SMG) Hansalpur facility brings some respite to us. The first line with total installed capacity of 2.5 lakh units per annum went on stream early February and will ramp up gradually. The Baleno is being manufactured there and this will bring down the waiting period on the Baleno."

"The total capacity available to Maruti Suzuki India (MSIL) in FY 17-18 therefore is 15.5 lakh units at Gurgaon and Manesar plus another 1.5 lakh units at SMG, totalling it to 17 lakh units or 1.7 million units/ annum,” he added.

And while the first assembly line at the Gujarat plant will ramp up partially this financial year, work on the second has also begun and the company may even go in for a third assembly line at Hansalpur. The campus is capable of ultimately going up to 7.5 lakh units per annum in combined capacity. The master plan of the Hansalpur campus includes three lines of 2.5 lakh units each per annum.

“The second assembly line at Gujarat plant (another 2.5 lakh capacity) and engine and transmission plants has been announced by SMC at an investment of around $ 900 million,” said Ayukawa.

“Work on this second plant in Hansalpur has commenced. Besides, the Hansalpur campus can also take a third assembly plant, in future, in line with market demand,” he added.

The frenetic capacity building is backed by some aggressive volume targets. MSIL sees itself clocking double digit growth in the current financial year.

“Maruti Suzuki is embarked on a mid-term goal of 2 million vehicles sales in 2020 and is working towards it on all fronts. Going by current estimates where the industry is projected to grow by 7-9 % in FY17-18 and we are determined to do better than industry,” said Ayukawa.

The capacity ramp up will further ease the waiting lists on the Ignis, Baleno and Vitara as well as take care of new models. “We are committed to bringing in 15 new models over the five years to 2020. In FY 17-18 we will bring two new models and two upgrades,” said Ayukawa.

As for existing models, “already in 2016-17 we were able to ramp up Brezza’s monthly availability by over 50% over a period of 6-7 months,” he said. “Similarly, for Baleno our production teams ramped up monthly availability by 50% over a period of 6-7 months. In 2016-17, Maruti Suzuki’s market share stood at 47.4% up from 46.8% in 2015-16.”

The company had announced a capex of Rs 3,500 crore for 2016-17 to be spent on new model introduction, R&D spend, marketing infrastructure and annual maintenance.

“In the last 15 years, India’s position has risen from 16th biggest car market to number five now and the Indian car industry is changing rapidly,” said Ayukawa. “ We are committed to bring 15 new models and upgrades by 2020 and we have already launched 8.”

In fact, segment leaders like Maruti Suzuki, Tata Motors and Hero MotoCorp have reported de-growth of 34.3 per cent, 45 per cent and 20 per cent, respectively giving a clear indication of a prolonged slowdown in the sector.